Kevin Drum - December 2012

The kabuki theater going on over John Boehner's Plan B is truly a wonder. Unlike some others, I don't think there's any mystery about why Boehner suddenly abandoned negotiations with President Obama and introduced his Plan B legislation. It's because, once again, he got sabotaged by his own party. The same way that Eric Cantor and the tea party caucus just flatly wouldn't vote for a compromise debt ceiling bill last year, they flatly won't vote for a compromise fiscal cliff bill this year. Without the votes of the crazies, Boehner was stuck, so he introduced Plan B as a face-saving way of wriggling out of negotiations with the White House.

But it turns out that the crazies won't even support Plan B. So now Boehner is larding it up with conservative catnip to try and pry loose some votes. And just what is it that conservatives want? Cuts in entitlements, as they've been claiming? Nope. Matt Yglesias takes a look at what's been tacked on:

When John Boehner needs to add spending cuts to a deficit reduction bill to make his most conservative members happy, they don't want to reindex Social Security benefits. They don't want to monkey with the Medicare eligibility age. That's not the stuff that gets them jazzed up. Taking food out of the mouths of hungry children, by contrast, is something they're excited about. They're eager to reduce regulation on banks and cut back on poor people's health care. Cutting spending on the elderly is something they'll maybe consider as part of a deal with Obama. Cutting spending on the poor is their idea of Christmas.

Conservatives don't want to cut entitlements. They don't want to cut defense. They don't really want to cut spending on the FBI or roads or ag subsidies. Actions speak louder than words, and it turns out that what they really want is goodies for corporations and the rich and fewer of their tax dollars going to the indolent, undeserving poor. Ho ho ho.

As for the stagnation issue, there are two main developments. The first is a resurrection of sorts, namely 3-D, which is a very real gain, but in my view it is a significant plus for fewer than ten movies, most notably Avatar.

I'm curious about something, and it's on my mind since I saw Life of Pi in 3-D the other day. Whenever I see a 3-D movie, I notice the depth for about the first five minutes, and then it just goes away. With only occasional exceptions for the most outlandish scenes, I pretty much see it as a flat 2-D movie. How about you?

Please avoid free-form rants about 3-D. I know some people like it and some people don't. I'm just curious about whether my response is common or not. When you see a 3-D movie, are you aware of 3-D throughout the entire film? Or does your brain turn it off after the first few minutes and basically turn it into a flat film?

Politics is art as well as science, and there's something just a little bit chickens**t about the Obama White House's tactics. Politics isn't only about winning — sometimes it's just about making the effort. And the truth of the matter is that when it comes to dealing with Congress, this administration hasn't made the effort. By my recollection, during its entire first term, the only international relations piece of legislation that got the full court Obama White House press was the New START treaty with Russia. Now given what was going on with the economy, one could argue that the administration had the right set of priorities. But one way to help jumpstart the global economy would be a series of potentially significant foreign economic policy moves — including the ratification of the Law of the Sea Convention, by the way.

....I hope that in its second term, the White House cares enough about foreign policy to actually engage Congress rather than throw up their hands and say, "crazy Republicans, what can you do?" Actually, President Obama, you could do one whole hell of a lot if you made an effort.

I'd probably take the other side of this argument. Dan's core reason for Obama to prioritize this stuff is that it might "jumpstart the global economy," but he slid by that assertion a bit too quickly for my taste. My guess is exactly the opposite: Obama could be the biggest treaty dynamo in the history of the Republic, and even if he succeeded the impact on the global economy would be barely measurable. In any case, I'd sure like to hear the counterargument.

Unfortunately, I suspect that Obama is right: foreign treaties just aren't all that important, and expending political capital on them doesn't make much sense. Republicans are crazy, and even the impact of the Law of the Sea Convention—which is certainly far greater than the disabilities treaty would have been—isn't enormous. Something like the Doha Round would probably have a significant effect if we could make progress on it, but that goes way beyond needing a bit more schmoozing from Obama.

Bottom line: I sympathize, but I suspect that Obama's priorities are about right. New START was important. Basel III was important. Keeping the NATO coalition together over Afghanistan was important. Dealing sensibly with Asia—which he has—was important. But trying to persuade the Michele Bachmann wing of the Republican Party to pass a few more treaties? It's hard to see a big payoff there.

Dylan Matthews has a good interview today with Barak Orbach, a professor of law at the University of Arizona, about the influence that Robert Bork had on antitrust law. In a nutshell, he is antitrust law. Pretty much all of modern antitrust doctrine can be traced back to books and articles he wrote in the 60s and 70s.

I was going to write about this yesterday, but I'm glad I waited. Here's Orbach:

In 1960, he was concerned the socialists would take over the country through antitrust. Antitrust then was about protecting small businesses. He built a full framework about how antitrust should be more about economic efficiency than about helping small businesses. He expanded upon this in articles and the book, The Antitrust Paradox , in 1978. He wrote a sentence: Congress enacted the Sherman Act as a "consumer welfare prescription." The Supreme Court adopted that sentence in 1979. That is the stated goal in antitrust today. It is a big deal. A huge deal. In antitrust, it's operational. Robert Bork defined it.

....Bork came around and said that we were protecting inefficient businesses. That was one of his most significant contributions. There's always a trend that big businesses go up, and then people have this sentiment that we should protect small businesses. So that was one thing that he created. He created this framework where antitrust should be efficient. He introduced economics into antitrust in a really systematic matter.

Read the whole thing for more. Bork, of course, was part of the Chicago School, which has been enormously influential in both economics and law over the past four decades. The problem is that there's something tautological about their beliefs. Bork, for example, believed that antitrust law shouldn't be about bigness per se, it should be about efficiency. But the Chicago school believes that successful companies are efficient almost by definition. If they weren't, they wouldn't have gotten big. George Priest, an admirer of Bork, explains:

That portion of Chicago School thought that addresses industrial organization derives from a single basic principle: Markets in the real world are generally highly competitive, constrained only by real costs of operation. It follows from this proposition [...] that actions taken in the market by a single firm generally represent a means for advancing the interests of the firm by providing value to consumers. Put conversely, if a firm's practices did not provide value to consumers, the firm would fail in the competitive battle. Thus, there is a presumption in Chicago School analysis that individual firm practices generally benefit competition and consumers, rather than the reverse.

This is where we are today. In the past, we had a relatively simple rule: companies weren't allowed to get too big, because that was presumptively a bad thing. Today, we've replaced this with a much fuzzier rule: companies are allowed to get as big as they want as long as they're still providing good value to consumers. But this gives corporations far more leeway in antitrust cases. They can present trainloads of evidence suggesting that consumers benefit from everything they do, and judges have to pick their way through it. Since it's very hard to prove that consumers would or wouldn't benefit under a different regime, it's very hard to win an antitrust case.

Is this the right approach? We can argue it all day long. But in the same way that constitutional originalism, whether right or wrong in the abstract, is inherently conservative, the consumer welfare approach to antitrust is inherently friendly to big business. It's all part of the "intellectual capture" of the past several decades, in which virtually all of us, liberal and conservative alike, have adopted views that, in the end, benefit big business and big finance. The intellectual superstructure is a bit different in every case, but the end result is consistent: the market operations of large corporations are assumed to be beneficial unless proven otherwise. And modern law and economics make proving otherwise damn near impossible.

An intellectual revolution has underpinned all this. But make no mistake: the real-world goals were always very clear. Today, we live in that world.

I haven't yet seen a print copy of our current issue, but apparently Steve Brodner did the illustration for my piece about the Republican Party. Judging from the video he did of the creative process, it must be a helluva drawing. I think I probably need a signed, poster-size copy for my wall. Enjoy.

How much new oil production can the United States get from shale formations like Bakken or Eagle Ford? The usual estimate is in the neighborhood of 3 million barrels per day by 2020, but I've read a few suggestions that this may be a considerable overestimate. The problem is that shale oil wells decline very rapidly, which means you have to drill a lot of wells to keep production at that level.

James Hamilton recently attended a lecture by David Hughes of the Post Carbon Institute, and he passes along some hard numbers on this. According to Hughes, the average well declines about 70% in its first year and about 30% per year over the succeeding four years. In the case of Bakken, which is the biggest shale formation currently active, this means that it might well hit its expected production rate of 1 million barrels per day, but it will then decline very rapidly, down to almost nothing within a few years. The chart on the right shows just how fast the decline occurs.

If this turns out to be accurate, and if it applies to other shale formations as well, the United States will never hit that 3 million barrel target. Declines in early fields will begin sooner than expected, and production from later fields will barely be able to keep up. By 2030 or so, shale oil might be played out completely. Shale oil is still likely to be important, but if Hughes is right, it might be less important than we think.

A key patent that Apple successfully used against Samsung in its multibillion-dollar courtroom brawl earlier this year has been invalidated by the U.S. Patent and Trademark Office. All 20 claims of U.S. patent No. 7,844,915 -- also known as the "pinch to zoom" patent -- were invalidated by the USPTO today, following a re-examination.

I continue to believe this is a mistake. The 915 patent doesn't cover pinch-to-zoom and Apple has never asserted that it does. But I might be wrong about that. It's certainly me vs. the entire rest of the world on this issue.

But forget that for a moment. This is actually way better news than it seems. Here is part of Claim 8 of the 915 patent (this is the claim that was at issue in the Apple-Samsung suit):

determining whether the event object invokes a scroll or gesture operation by distinguishing between a single input point applied to the touch-sensitive display that is interpreted as the scroll operation and two or more input points applied to the touch-sensitive display that are interpreted as the gesture operation;

That's Apple's claim: that it has a patent to a programming method that can distinguish between one finger on the touchscreen (scrolling) and two fingers on the touchscreen (gesturing). This is far worse than patenting pinch-to zoom. It broadly suggests that Apple has exclusive rights to the entire concept of one finger vs. two. The fact that the patent office has invalidated it—along with every other claim in the 915 patent—is great news. Something this broad should never have been granted a patent in the first place, and it's gratifying that the patent office has finally come to its senses and figured this out.

POSTSCRIPT: By the way, I'm still mystified by the media's insistence that the 915 patent covers pinch-to-zoom. But like I said, I might well be the one mistaken here. What I'd like to see is one direct quote from either Apple, Samsung, or Google that explicitly mentions "pinch-to-zoom." So far, the only place I've ever seen that phrase (or anything similar) is in summaries by reporters. None of the lawyers or PR folks for any of these companies ever seem to mention it.

POSTSCRIPT 2: If you're interested, here's my complete set of posts about this from last August:

I remain confused about this, but read the posts if you want to get up to speed on the whole issue. Remember: in a patent, the only things that matter are the claims. All the rest is just window dressing.

John Boehner's "Plan B" is obviously just political theater. Hell, it's not even good political theater. Sure, it allows the the top marginal rate for millionaires to increase to its fiscal cliff level (i.e., the level it will be at if we do nothing), but capital gains rates would go down, dividend rates would go down, and estate tax rates would go down. "Pease" limits on itemized deductions are eliminated, and the planned phaseout of the personal exemption goes away too. On net, millionaires do pretty well for themselves. At the same time, tax rates on the poor and middle class would go up.

This is just a bad joke. But the negotiations of the past few weeks have made clear that nothing has changed in Republican-land. Boehner just flatly doesn't have the support of his caucus for a real deal. So he makes up weird stuff about interest expenditures "not counting" as a pretense to reject Obama's latest offer, and then tosses out a plainly unserious plan as a way (he hopes) of creating a land mine for Democrats.

This is grade school stuff. Apparently, there's simply no way to make a deal with House Republicans. Boehner is doing his best to mask that uncomfortable fact, but that's where we're at. The lunatics are still running the asylum.

President Obama's press conference is still ongoing as I write this, but it's pretty remarkable. He spoke fairly powerfully for some time about gun violence and his intention to submit a gun package to Congress by January. Then he took questions, and the press corps simply couldn't have cared less. There have been four questions so far, and all four were the usual nitwittery about the fiscal cliff. There's no news there and everyone knows it. There's nothing Obama can really say. But it's Beltway process news, and that's what every reporter cares about.

Guns? Whatever. Now tell us whether you think your budget proposal is something Republicans should accept. You do? How remarkable!

UPDATE: Hold on! Question number five is about guns. Hooray!

UPDATE 2: The last question of the press conference came from Jake Tapper, who pointed out that Obama had made a "political calculation" to avoid gun issues in his first term even though there had been several mass killings during that time, including the Aurora massacre last July. "Where have you been?" he asked. Watch the exchange below, starting at 22:00:

I know that everyone already knows this, but I suppose it bears repeating. When the NRA says, in response to the Newtown massacre, that it's "prepared to offer meaningful contributions to help make sure this never happens again," they mean exactly the opposite. They will hold a press conference on Friday and talk somberly about mental health. They will blame Hollywood and video games. They will insist that we need to enforce laws already on the books. They will proclaim a willingness to have a "dialog."

But it will be a sham, as always. They will, as usual, do their best to distract pundits and talking heads with discussions of Xboxes, programs to help disturbed teenagers, and other shiny objects unrelated to firearms. They will continue doing everything they can to demonize the ATF and keep it effectively powerless. They will continue to fight any proposals that would regulate gun ownership in even the smallest way. They will make no changes to the scorecards they keep on their pet legislators. They will do everything they can behind the scenes to slow things down until, they hope, everyone gets tired and just goes home. They've spent the entire past week strategizing about how to do this in the smoothest, least noticeable way possible.

We all know this. Just be sure to keep it in mind over the next few weeks. Don't let mental health or Grand Theft Auto distract you, no matter how worthy you think those topics are. If you want to get anything done, keep your focus on guns and nothing but guns.